How to Set Up a Company in China: A Practical Guide for Foreign Investors

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China remains one of the world’s largest markets, and many companies from Latin America and Europe eventually ask the same question: how do we establish a legal presence there? This article gives an overview of the main steps. Every project is different, so treat it as a starting point rather than a checklist.

1. Choose the right vehicle

Since the Foreign Investment Law came into force on 1 January 2020, foreign-invested enterprises are generally organised under the same Company Law that applies to domestic companies. In practice, foreign investors usually choose between:

• A wholly foreign-owned limited liability company (often still called a “WFOE”). It is the most common option. The foreign investor holds 100% of the equity and has full control over management and profits.
• A joint venture with a Chinese partner. Useful when a local partner brings licences, distribution or relationships, or when the sector requires Chinese participation.
• A representative office. Simple to set up, but it cannot carry out direct profit-making activities or invoice clients. It suits market research and liaison work.

2. Check the Negative List

Foreign investment is open by default, except in sectors listed in the Special Administrative Measures for Foreign Investment Access (the “Negative List”). Some sectors are prohibited, others are restricted (for example, they require a Chinese partner or a cap on foreign ownership). Check the current edition before planning the structure.

3. Define the key elements

Before filing, the investor needs to decide:

• Company name, in Chinese, following the local naming rules.
• Registered address. It must be a real commercial address; virtual offices are accepted only in some zones.
• Business scope. It defines what the company can legally do and invoice. Draft it carefully, because changing it later requires a new filing.
• Registered capital. Under the revised Company Law in force since 1 July 2024, shareholders of a limited liability company must pay in their subscribed capital in full within five years of incorporation. The amount should be realistic for the planned operations.
• Corporate governance. The legal representative, the director(s), the supervisory function (a supervisor or, where allowed, an audit committee) and the general manager.

4. Prepare and legalise the investor’s documents

Chinese authorities will ask for documents proving the existence of the foreign investor, typically its certificate of incorporation or good standing, and the identity documents of the individuals involved.

Good news here: since 7 November 2023, mainland China applies the Hague Apostille Convention. For investors from countries that are also parties to the Convention (such as Mexico, Spain and most of Europe and Latin America), an apostille replaces the old process of consular legalisation, which saves weeks. Documents still need a certified Chinese translation.

5. Register with the market regulation authority

The application is filed with the local Administration for Market Regulation (AMR). Once approved, the company receives its business licence, which carries a Unified Social Credit Code. The foreign investment information report is now submitted through the same registration system. Timing depends on the city and on how complete the documents are.

6. Post-registration steps

After the business licence is issued, several steps remain before the company can operate:

1. Company seals (chops): carving the official seals and filing them with the Public Security Bureau.
2. Bank accounts: a basic RMB account and a capital account to receive the foreign capital contribution.
3. Tax registration: confirming the tax type and obtaining access to the invoicing (fapiao) system.
4. Social security and housing fund registration, before hiring employees.
5. Customs registration, if the company will import or export.

7. Plan for ongoing compliance

Setting up the company is only the beginning. Foreign-invested companies must file annual reports, keep their accounts audited, pay in their capital on time, and comply with tax, employment and data protection rules. Getting the structure right at the start makes everything that follows easier.

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The views expressed are personal and do not necessarily represent the position of NET CRAMAN. This article is for general information only and does not constitute legal advice. Requirements vary by city and change over time; seek specific advice before acting.